Intellectual Property Makes ETF Look Smart

But having essentially no financial exposure is a two-way street. Over the last month, the Financial Sector SPDR(XLF Quote) has snapped back 25%, helping the S&P 500 outperform OTP by 3% over that time. While one month may not mean too much, it does offer a glimpse into the future.

After the carnage that the financial sector has endured thus far, it makes sense to expect a monster rally (not to say it won't go down a lot more first). When the big one does come, I would expect OTP to lag then as well.

The bigger takeaway here is that it is unlikely that any one method can always be the best way to invest. I was favorably disposed to OTP in that first article in part because the inverted yield curve suggested trouble for financials. (This is something I wrote about countless times in TheStreet.com articles and on my blog.)

From here going forward, the financial trade is less obvious, because the sector has already been cut in half (and may be working its way back). More bad news is very likely to come from the sector, and expecting at least one more failure bigger than Bear Stearns is a good bet. But still, the sector is now down 40% from its peak.

Another potential obstacle for OTP over the next couple years goes back to the yield curve. Historically, a steeper yield curve has favored value stocks over growth, and usually the curve steepens with the start of a new economic expansion. OTP's growth-over-value bias creates visibility for OTP to lag.